S&P's Research: In Motion

Drawing on a history of integrity dating
back to 1860, Standard & Poor’s offers among the highest quality research
available, with some 65 analysts along with director of US equity
research, Stephen Biggar. Here’s a look at a recent "Stock of
the Week" from S&P's The Outlook.

"Research in Motion (RIMM NASDAQ)
has a premium valuation compared to peers. But its strong business model and
performance make it a compelling stock. Founded in 1984 and based in Canada, the
firm is best known for its BlackBerry wireless e-mail device. Introduced in
1999, BlackBerry has found popularity primarily in the enterprise market, or
large corporations and government—
providing e-mail, phone, SMS messaging, Internet, and
intranet-based applications.

"We at S&P believe RIM will benefit from
the pent-up demand for BlackBerry units. With its patent lawsuit settled for
$612.5 million in cash, we believe the company can now focus 100% on the
business of driving its BlackBerry service. Recent product introductions from
Motorola and Nokia may begin to gain share of the mobile e-mail and messaging
market, in our opinion.

"In our view, the market for
wireless solutions is still in the early stages compared to the broader wireless
voice market. We also believe the market for mobile e-mail in the enterprise market
is ready to take off. According to Nokia, there were more than 1.2 billion
e-mail boxes worldwide at the end of 2005 and 650 million corporate e-mail boxes,
but only eight million mobile e-mail subscribers.

"At the end of fiscal
year 2006, RIM had five million BlackBerry subscribers. The company's BlackBerry service
is tied to more than 55,000 enterprise servers that are linked to 250 wireless
carriers. In April, Yahoo!, the most-used mobile Internet brand, and RIM
expanded their strategic global alliance to bring Yahoo services to BlackBerry
users around the world, including Yahoo Go for Mobile, Yahoo Search, Yahoo Mail,
and Yahoo Messenger.

"We believe RIM has an
attractive business model, with its BlackBerry contributing to more than 30% sales growth
and low net margins in fiscal year 2007. With $1.2 billion of net cash
and investments, the company should, in our opinion, be able to meet
its working-capital requirements and still achieve return-on-equity in the mid-to-upper teens by
fiscal year 2007 (February).

"We view RIM as a compelling
communications-equipment stock in S&P's information-technology sector. We
think the combination of high market-growth potential, new products, an
expanding presence in emerging markets like China and India, and competitors
that lack either RIM's focus, strong customer relationships, or resources to
offer a full-service offering for wireless e-mail and Web-based applications,
makes RIM highly attractive.